chapter 8 oil deregulation (summary)

7/29/2019 Chapter 8 Oil Deregulation (Summary)

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CHAPTER 8: Department of Energy Act of 1992

(Part II)

F. Downstream of Oil Industry Deregulation Act of 1996

Downstream Oil industry

Refers to the business of exporting, re-exporting, transporting, processing, refining, storing,distribution, marketing and/or selling of all petroleum and crude oil products (crude oil,

gasoline, diesel, LPG, kerosene, etc.)

Under the deregulated environment, any person or entity may import or purchase any quantityof crude oil and other petroleum products from any foreign or domestic source

A. Antecedents of the Statute

RA No. 8180 ended 26 years of government regulation of the downstream oil industry Pro-found background of the New Legislation (Tatad v Sec. of DENR)

Prior to 1971 No Government agency regulating the oilindustry

Oil Companies was free to enter and exit themarket

Year 1971 Country was driven to its knees by crippling oilcrisis

Oil Industry Commission (OIC) was created toregulate all activities of petroleum products

This includes fix market prices of petroleumproducts

November 9, 1973 President Marcos boldly created PNOC(Philippine National Oil Corporation) to break

control on foreigners to our oil industry Later put up PETRON Corporation (first

Filipino-owned oil company in the market)

Year 1984 Marcos created OPSF (Oil Price StabilizationFund) to cushion effects of changes in prices of

oil

OPSF may source funds from:a. any increase in tax collection from ad


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valorem tax or custom duty

b. any increase in tax collection resulting from

lifting tax exemption of govt. corporations

c. any additional amount imposed on

petroleum products

d. any resulting peso cost differentials

Year 1985 3 companies operating in the market: Caltex,Shell and PNOC

May 1987 Aquino signed EO No. 172, creating the Energy

Regulatory Board- regulate exporting of energy

resources.

March 1996 Congress enacted RA No. 8180, Downstream

Oil Industry Deregulation Act of 1996

2 Phases:

A. Transition Phase lifted controls on non-

pricing aspects of oil industry

B. Full Deregulation Phase lifted prices of oil

and forex and OBSF was abolished

RA 8180 was held UNCONSTITUTIONAL

Arbitrary and unreasonable because it was enacted due to the alleged depletion of OPSF Funds It allow the formation of a de facto cartel among existing oil companies Petron, Caltex and

Shell

Violations against Sec. 19 of Article XII of Phil. Constitution:o It espouses competition

RA No. 8479 was enacted, known as Downstream Oil Industry Act of 1998

RA No. 8479

Policy of the state to liberalize and deregulate the downstream of oil industry

- To ensure truly competitive market under regime of fair price- State shall encourage the entry of new participants to avoid monopoly

Liberalization of the industry

- Under law, any person or entity may import or purchase qty. of crude oil from a foreign ordomestic source

- However, it is REQUIRED, to give prior notice to DOE for monitoring purposes- And report to DOE every importation/exportation


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Tariff Treatment

- Single and uniform tariff duty must be imposed both on imported crude oil and petroleumproducts at rate of 3%

- President may reduce tariff rate based from his personal judgmentPromotion of Fair Trade Price

- DTI and DOE are mandated to promote fair trade to avoid cartelization and monopoly oftrade and any means of unfair competition in the Industry

- DOE shall monitor the relationship between oil companies and their dealers- DOE is empowered to resolve any dispute which may arise to the contractual relationship

between oil companies and dealers

Anti-trust Safeguards: To ensure fair competition and prevent cartels and monopolies

- Prohibits Cartelization means any agreement or concerted actions by refiners, importersto fix prices, restrict outputs or divide markets either by product or by areas

- Prohibits Predatory Pricing selling or offering to sell any oil product at a price below thesellers average variable cost for purpose of destroying competition

- Failure to comply on (1) submission of reportorial requirements; (2) use of clean and safetechnologies; (3)order instructed by DOE; (4) registration of any fuel additive

Remedies

a. Government Action

- Join Task force was created to resolve any violation of Sec. 11

- It shall direct the prosecutors to institute actions to prevent restraints of such violations

b. Private Complaint

- Any person or entity shall report any violations of Sec.11 to Joint Task Force

- They may sue or obtain injunctive relief and damages before the proper court.


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chapter 8 oil deregulation (summary)

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